Washington, D.C.; May 25, 2023: Today, in a 9-0 decision, the Supreme Court ruled that a Minnesota law allowing local governments to seize all the equity in a home over much smaller property tax debts is unconstitutional.
“Today’s decision is a major victory for property rights in the United States,” said Pacific Legal Foundation attorney Christina Martin, who argued the case before the Court. “This decision affirms that property rights are fundamental and don’t depend solely on state law. The Court’s ruling makes clear that home equity theft is not only unjust, but unconstitutional.”
The Court ruled that when the government takes a person’s home equity to satisfy a property tax debt, it violates the Constitution’s Takings Clause, which bars the government from taking private property without providing just compensation.
Writing for the majority, Chief Justice John Roberts said “A taxpayer who loses her $40,000 house to the State to fulfill a $15,000 tax debt has made a far greater contribution to the public fisc than she owed. The taxpayer must render unto Caesar what is Caesar’s, but no more.”
Additionally, Justice Neil Gorsuch’s concurring opinion (joined by Justice Jackson) determined that home equity theft may also violate Constitution’s Excessive Fines Clause, which limits the amount governments can take as punishment for an offense. He said “Economic penalties imposed to deter willful noncompliance with the law are fines by any other name. And the Constitution has something to say about them: They cannot be excessive.”
The case was brought by Geraldine Tyler, who owned a small one-bedroom condo in Hennepin County, Minnesota. After moving to an apartment for senior living, she fell behind on her property taxes on the condo and amassed $2,300 in taxes owed, plus $12,700 in penalties, interest, and costs.
To collect the debt, Hennepin County seized Geraldine’s condo and sold it for $40,000, keeping every penny — a windfall of approximately $25,000.
Geraldine’s case will now go to the trial court, where she will argue that she is owed the fair market value of her property, minus her debt, as just compensation for the taking.
Pacific Legal Foundation (PLF) has found that more than a dozen states engage in home equity theft [See the map.] Homeowners across the United States lost more than $860 million in life savings on more than 8,950 homes.
The fight to end home equity theft now moves to state legislatures. PLF is sending letters to all states that permit this practice, demanding that they change their laws to comply with today’s Supreme Court decision. States that neglect to follow PLF’s guidelines for reform may be subject to liability in takings lawsuits.
Tyler is Pacific Legal Foundation’s third win of the term alongside Sackett v. EPA also decided today. PLF now has 17 victories out of 19 cases litigated at the nation’s highest court.